Xoom Investors Blame Fraud on Poor Controls

(CN) - Poor internal controls facilitated a $30.8 million criminal fraud at Xoom Corp., an online money-transfer company, a class action in San Francisco alleges.

Alexander Liu hopes to represent a class thousands of shareholders against Xoom and its chief officers under the Securities Act.

The nine-page complaint filed in San Francisco Superior Court takes aim at documents filed with the Securities and Exchange Commission in early February 2013, in connection with Xoom's initial public offering.

"Xoom sold approximately 6.3 million shares from the IPO, raising proceeds of more than $101 million," the Jan. 6 complaint states.

It is clear Xoom's SEC filings "omitted material facts because it failed to disclose that Xoom's internal controls were so seriously deficient that tens of millions of dollars of Xoom's corporate cash could be fraudulently transferred and stolen without the company's knowledge," Liu says.

"On January 5, 2015, Xoom announced that a criminal fraud had taken place at the company, whereby $30.8 million in corporate cash was illegally transferred to oversea accounts," the complaint states.

The news allegedly caused Xoom shares to fall 27 cents, "more than 1.6% in intraday trading on January 6, 2015."

Liu names Xoom president and CEO John Kunze as a defendant as well as CFO Ryno Blignaut.

He notes that Blignaut acted as CFO from March 2008 to Dec. 1, 2014, but returned as acting CFO on Jan. 5 after his successor suddenly resigned as news of the fraud broke.

Federal law enforcement authorities are pursuing a criminal investigation, according to the complaint.

Delaware-based Xoom has offices in San Francisco, the complaint states.

Liu is represented by Los Angeles-based attorney Laurence Rosen.

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